Jay Abraham Getting Your Business Going

8/3/2019 Jay Abraham Getting Your Business Going

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How To Get Any Business Going and GrowingTony Robbins Interviews Jay Abraham

How To Get Any Business Going and Growing

Tony Robbins, the nations busines and personal peak

performance expert interviews Jay Abraham, Americas

leading business growth advisor

Welcome to another edition of Powertalk. I think you're going to especially enjoy thisinterview. For a number of reasons. First of all, the person you're going to have a chance to visitwith is a very, very special man. In fact, he's brilliant in an area that I think can really make adifference in your life -- regardless of how successful you already are. And that is in the area calledmarketing. You might say, "Why would I want to know about marketing -- I'm not a salesperson."

The answer is simple. All businesses are about marketing. And in today's society where things areso competitive, just because someone has a better product very often does not mean that they willhave a better income, or that the person who is the best at a job will keep that job. There is a greatdeal of downsizing going on, companies are going out of business very rapidly, and doing the best jobdoes not guarantee you a sense of certainty about your future. In fact, many people are finding thatwhat they were trained in for years is disappearing. So, this interview should not only inspire youbut also give you fundamental tools on how you can take control, create a competitive edge andmarket yourself and your business more effectively.

We're going to get the chance to visit with a man by the name of JayAbraham. Jay is a phenomenal human being -- an amazing man whos taken partnow in more than 10,000 businesses and more than 10,000 companies are using his

principles to successfully run their businesses. He's earned more than twentymillion dollars just from his consulting fees in the last 20 years alone by addingvalue to companies and by coming in with a brand-new perspective about how to getyour message across and how to attract people to your product or service. Lookcarefully for those distinctions that will relate to not only where you are today inyour life but also where you will be in the future.

The principles that he shares are also quite fundamental and require us tothink differently. I could tell you all about his accolades, in terms of his write-ups intheLos Angeles Times and Success Magazine, and his relationship with one of thefounders of Federal Express. But I think what is more important is who this man is

and what he can share with you. So, without any more platitudes let me begin.

Tony Robbins (TR): I understand that you charge $5,000 an hour for consulting and that most ofthat is done by telephone. Your seminars are priced between $5,000 and $25,000, depending on howmany people you allow to be there. What makes you worth this kind of money to businesses andindividuals? What exactly is it that you do, sir?

Jay Abraham (JA): I teach almost any kind of business owner or professional how toharvest the windfall profit sitting in every business that most people don't allow

1 2000, Abraham Publishing Group, Inc.Proprietary materialsnot for reproduction or distribution


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themselves to mine. I teach people how to turn one-shot sales into perpetual streams ofincome -- and I think I teach them how to have a lot more fun competing and gainingcompetitive advantage over everybody else in their marketplace or industry.

TR: I've heard you say many times that you think virtually every business you've

ever looked at -- and you've looked at more than 10,000 -- has between $10,000 and$1 million of assets sitting on the table that they really aren't seeing. Quite honestly,when I first read some of your materials, I thought, "This is a lot of hyperbole."But as I've gotten to know you personally throughout the years, you really haveconsistently produced those results. Where is this money and how do we find thiswithin our businesses?

JA: It has to do with an interesting aspect of leverage that not one in a thousand businessowners, CEOs or accountants ever recognize -- and those are the intangible assets. Thatmeans the advertising, marketing, good will, customer relationships, distributionchannels and expertise that a company possesses -- and ways they could more effectively

and productively use them to their advantage.

TR: Let's talk about what that really means. Peter Drucker says that there are twoquestions in business: question one is what business are you in, and question two ishow is business? That's it. I would say there probably is a third question -- with alldue respect to Mr. Drucker -- and that is how do you improve business, which isreally the question you tend to answer. He also said that all businesses are designedto bring in a customer and that can only be accomplished through marketing andinnovation. Do you agree that those are the only two functions of business andeverything else is an expense?

JA: Absolutely...and those are the core principles we teach at our training programs.

TR: So, let's say you're going to walk into my business tomorrow or into a localentrepreneurship. What would be the first thing you would do to harvest theseprofits that aren't there? Let's make this practical -- maybe give us an example.

JA: I can do an inventory right now -- a self-audit, if you will. The first thing I look at iswhat are you doing that you're not getting leverage enough out of.

TR: What does that mean?

JA: It means this. Every business is engaging in certain money-rendering, customer andprospect generating processes they don't even recognize -- let alone measure and analyze.Until and unless they recognize what and how they're doing, they can't begin to see howmuch better they could be performing. Now, let me stop and talk a little about leveragein the new context that we're going to talk about. Most people -- particularly people whohave a financial bent -- think of leverage as having two quotients to it: upside potentialand downside risk. That happens when you buy real estate, lease a piece of capitalequipment or buy any other kind of investment with little or nothing down and a future



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payment obligation. I don't want to deal with that. I want to deal with the mostwonderful kind of leverage each and every business person -- and probably almosteverybody who is gainfully employed in any activity to an employer -- has and that'supside leverage. Parenthetically, it costs you as an employer, business person orprofessional the same fixed amount -- no matter what it is you do -- to drive business into

your company. If you run ads, have salespeople, generate referrals in a subtle,understated type approach, do direct mailings, have outside field people, usemanufacturers reps, do trade shows or whatever, the activity costs you "X" dollars -- andthat "X" is a fixed cost and has no correlation to how the action or the process performs.

TR: In other words, you're going to pay that much no matter how much of areward you receive.

JA: Exactly, the same ad that cost you $10,000 in tomorrow'sLos Angeles Times canproduce one order or call, 10 orders or 110 orders. The same mailing piece can pull a 3percent response, a 5 percent response or a 10 percent response. The same salesman or

woman can close 1 out of 25 people called on, 1 out of 15, 1 out of 5, or 1 out of 2.Correspondingly, that's only the first layer of this wonderful upside leverage everyoneand every business has that few people recognize. Our seminars teach people how to usethis leverage to grow their business.

TR: So, you're saying that in most investments, I'm going to invest my money and Ihave a potential return but also a potential loss.

JA: Most of the time that loss is very eminent and very frequently occurs.

TR: Okay, so in other words, there's a great chance that I'm going to lose my

money in the investment, or get a very small return that I'm going to put into asavings account, money market or something similar. But if I want a large return --a decent return -- I'm going to be aggressive and have a greater chance of losing mymoney or a portion of my capital. You're saying in a business, because of the powerof marketing, there are ways of leveraging my money where I'll get a 20 or 30 or 40times return for my money with virtually no downside at all...

JA: Or 200 or 400 or 2,000 percent. That's one of the major benefits of owning abusiness and of learning how to expand profits exponentially.

TR: Which I'm really not going to find in a passive investment, per se.

JA: Well particularly with zero downside.

TR: Now, how do you get zero downside? I know you talk about this. You oftensay -- listen, if you want to really develop wealth, the way to do it is through yourown business as opposed to passive investment because the upside is so muchgreater and there is almost no downside. And yet the reality that we read every day



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in the newspaper tells us that two out of three businesses that start today won't bearound in five years.

JA: And that's exactly right because they haven't learned any of these dynamics that Iteach.

TR: Okay, how do we achieve this leverage and at the same time produce the levelof security you're talking about?

JA: Well, first it comes from analyzing, measuring, identifying -- and then replacing --certain underperforming aspects of your selling, marketing, advertising, or operationswith alternatives that perform better.

TR: And that's what you're an expert, really, at doing

JA: I would say so.

TR: Give me an example of where you've done that so we get some kind ofreference. Give us an example where a portion of a business was underperformingor the market wasn't performing and where you came in and produced fantasticresults.

JA: I'll give you two or three. First of all. I want to give you a reference frame. You'vegot to think about what could be underperforming. The sales people could beunderperforming, their presentation could not be closing, the markets they could be goingafter could be incorrect -- there's all kinds of potential problems. You could be havingyour sales people working their hearts out but calling on the wrong quality prospect. You

could have them working their hearts out calling on the right prospects but making thewrong proposition. You could have them working their hearts out calling on the rightprospects, making the right proposition, but not having the right risk reversal policy toinduce people to buy their product and to make it easier to reduce the barrier of entry.

You could have an ad running or a letter going out, and because it has the wrongbeginning, it could underperform it's capacity by as much as 20 or 30 times. Here, I'llgive you a couple of examples. Years ago I worked with a brokerage firm that wasselling precious metals. They ran ads in the Wall Street Journal and happened to have arelationship with a bank that was bank-financed. They ran ads for bank-financedpurchases of silver and gold. Their headline said "Two-Thirds Bank Financing on Silver

and Gold." When they ran the ads, they pulled okay. They brought back a profit -- thesales people made commissions adequate enough to stay, the owners made salaries, theoverhead was paid and they had money left over to keep running the ads. They werehappy. But they hadn't questioned how "high is high."

TR: In other words, what is the real ultimate leverage if these ads could pullmore...if we could improve them! So, they began to accept it because it was



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profitable, as opposed to raising the standard and saying I want a 20 or 30 timesreturn. That's what you helped them do. Now, exactly how did you do that?

JA: Well, I immediately asked them if they ever tested headlines, just as I ask theseminar attendees to analyze their advertising. By the way, most people try to redo ads --

that's the most inefficient thing in the world. If an ad basically pulls, the first thing youchange is the opening statement. In a fixed print ad, it's the headline. In a direct mailing,it could be the headline or the opening phrase. In a direct selling situation, it's the firstparagraph you as a sales person utter. Same thing if a sales person walks into a retailstore, it's the first group of words the person who meets them utters and everything inbetween. And the trick is two-fold. The goal is to make the first statement a statement ofthe powerful, self-serving result the prospective customer is going to receive fromavailing themselves of your product or service.

TR: There is something else I've heard you talk about many times. It's that mostbusinesses think people are buying a product and you disagree with that.

JA: Right, they are all buying a result, a benefit -- an outcome that is very self-serving tothe end user. People could care less why you're in business, that you need to makepayroll, or whatever. The only reason they deal with you (or they let you deal with them)is that to some extent they see an advantage in it for themselves. The clearer and morepowerful you are at expressing, articulating, demonstrating, illustrating and comparinghow you render that advantage better than anyone else you deal with -- the more businessyou will get. During our seminars we conduct ad clinics to teach business owners exactlyhow to make their marketing customer-oriented.

TR: But, in truth, the secret is being able to do that as quickly as possible,

especially in today's society where people pay so little attention to something. Theywant their needs met, and they want them met now.

JA: That's the purpose of having a powerful opening premise, headline, or a prefacingstatement. So, back to my story. This company had never tested headlines. They weredoing great -- or so they thought. I said, "Let's try three other permutations of our offer."We tested them. Three small headline changes. One did a little bit better -- about tenpercent. One did about the same -- the improvement was negligible. And one improvedthe yield of the ad they were running by 5 times -- or 500 percent. This was back whengold was not selling very high -- it was about $300 for gold and about $6 for silver.Remember they were saying "Two-Thirds Bank Financing on Silver and Gold." Keep in

mind, my question is always what does that mean to me as the customer. It meantnothing -- so I changed the headline. All I said was, "If Gold Is Selling for $300 anOunce, Send Us Just $100 an Ounce and We'll Buy You All the Gold You Want." And Ihad one for silver, "If Silver is Selling for $6 an Ounce, Send Us Just $2 an Ounce andWe'll Send You All the Silver You Want."

It was the same statement but more powerfully denominated in the context of what's in itfor the ultimate consumer. That one simple change, of all about 12 words, made in the



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same amount of space they were buying and using the same amount of body copy, whichwas 90 percent of the ad, increased their pull by 500 percent. I was getting a profit share,and they sent me $30,000 a month for about 12 months just for that one change. Butthat's one example.

TR: A good three minutes worth of work.

JA: It was good. I always, either individually or in my seminars, teach people how toidentify, analyze and measure what I call the marginal net worth or lifetime value of acustomer. When I meet people, I ask them a couple of questions and it's pretty amazing.The first question I ask is, "In a minute or less, tell me what it is about your business thatgives greater advantage, greater benefit and greater result to your customer than yourcompetitors." Most business owners will say, "Nothing -- or say quality, service, ordependability."

TR: You're right. Everybody says that.

JA: Which at best is negligible. It doesn't mean anything. The second thing I ask themis, "What is the lifetime value of a customer?" They look at me, and I ask them thisfollow-up question: "How do you know how much to spend for advertising, selling or ona promotion?" They'll say nothing or they'll say "X" dollars. I'll then say how do youformulate that, and they'll say they just sort of allocate it.

The answer is always the same. Doesn't it make better sense to first of all find out what acustomer is worth to you -- worst case -- the first time you sell them? If you sell 100customers,what's their average worth in unit of sales and then the corresponding profit?Of those 100 customers, how many will come back if you do nothing else? What is the

projected long term value that each customer will be to you in net bottom line profit? Noone ever looks at that. In my mind, until you know what a customer is and will be worth,you can't possibly understand how much you can afford to spend to acquire them.

Back to the examples. I had a client who sold fluid transmission products. They came tome and they said they were almost out of money. They had six sales people that weredoing whatever they wanted to do and were not really managed -- trying to sell farmersand manufacturers. And they had a compensation program that was pure commission,and the sales people got approximately 10 percent of the profit. If they made $1,000profit on something, the salesman would get $100 and the house would get $900. Theysaid, "What can you do?" I said, "All you have to do is tell me what the lifetime value or

the marginal net worth of your customer is -- tell me what the average new customer isworth to you in unit of sale the first time, how many times that customer will buy fromyou the first year and how many years they will be with you." They were shocked withthe answer. It turned out the initial first sale on average was about $200 gross profit forthe company -- of that $20 went to the sales person and $180 to the company. And onaverage, the customer bought five times a year for three years. So each time they got anew customer in the door, they were accruing $3,000 in cumulative profits they'd neverrecognized. I said, "Your solution is simple. All you have to do is set up a basis with



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your sales people where as long as they keep their production levels from their existingcustomers at or above their norm, you'd give them 100 percent of profit on every initialsale from a new customer they bring in."

TR: So the sales people made $200 instead of $20.

JA: Yes, but every time the sales person made $200, the house was accruing $2,800.They felt it wouldn't work but agreed to try it as a test. To make a long story short, salestripled. It doesn't have to be that hard, Tony.

TR: Well, let's talk about the business you did with Icy Hot -- I think that's anothergood example of leverage. You took dormant resources and human ingenuity tolook at the business in a brand-new way and got a tremendous increase in thequality of life. I also want to relate this to people who may not own a businessbecause people who don't own a business still have resources within themselves thatcan be redeployed.

JA: The story is that most people allocate within their business a budget. It can be asales budget, an advertising budget or a marketing budget. I've learned that you can havean infinite upside budget if you stop looking at budgetary figures and start looking atallocating an allowable cost per sale, lead or transaction.

TR: So instead of saying we've got $100,000 in our budget to produce sales for thisparticular event or situation, I want to say that I can spend...

JA: I'll spend $25, up to $25 a prospect, or up to $100 a sale, and you can bring me allthe sales you can because you know the residual value, the stream of income, and the

lifetime value if you do nothing else. Icy Hot was a company that sold a patent medicine,like Ben Gay or Mentholatum. It's a balm of mentholatum and it happens to have a verygood therapeutic, external affect on bursitis, neuritis, arthritis and other kinds ofrheumatic-type ailments. We bought this whole company that had almost no business.We were going to put it under and just use its facilities. But we kept getting letters andletters from men and women who had been buying it for years begging us to keep sellingit because it was the only thing they could use to get their arms moving and their legswalking and their pain subsiding. So we decided to try to build this.

We didn't have a lot of money -- but we did have a philosophy of not paying foradvertising -- only paying for results. The product sold for $3 a jar. We went to

advertising mediums galore. We went to over 1,000 radio stations, television stationsand magazines. We went to catalog and mail order companies and all kinds of other non-traditional forms of selling. We went to them and said if you offer our product for sale toyour customers, first it will not be any kind of a competitive product, because it only addsvalue: second, it sells for $3: and you can keep 100 percent. Everyone thought we werecrazy selling something for $3 and not even making the hard cost of the goods.



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TR: How can you say that? I agree with you, by the way, but I've got to play thedevil's advocate.

JA: That's okay. It goes to the fact that I've seen how few people understand how to

optimize their time, money and opportunity. The moment you understand that, you'vegot a clear playing field because you can do things that are so much more proactive andeffective. You can make a dollar go so much further. You can make a customer last somuch longer and make an activity produce much more current and future yield.

TR: You've opened up several loops there for me to close. What stops people fromoptimizing? What is optimization?

JA: Let me tell you what stops them.

TR: Mindset, right.

JA: It's the difference between "tunnel" vision and "funnel" vision. Most people havebeen in their career, business or profession for a long time and know "it" so well -- but allthey really know is the way that their industry operates. If you look at any field, a retailcompany, a professional practice, a manufacturing company -- almost everyonecompeting in that industry is doing plus or minus about 20 percent the same marketingapproaches the same way.

The reason is that they have such technical expertise, but all they know is what theyknow. And all they know is what they see other people doing because they used to workfor somebody else, or they tutored or interned with somebody who a generation or a

decade ago did it the same way. I've been privy to look at over 400 separate industries.When you look at 400 separate industries, you learn two things. It's like traveling --when you travel outside of Los Angeles, you see there are a lot of different lifestyles thanthe one in Los Angeles -- when you travel outside of California, you see there are a lot ofdifferent climates and a lot of different values -- when you travel outside of the UnitedStates, you see there are a lot of different cultures, a lot of different values, a lot ofdifferent work ethics, climates, temperatures and exotic things.

TR: It gives you a broader selection of choices for your life.

JA: And possibilities. It gives you a reference. You can call it having more distinctions.

When I got the privilege of traveling amongst 400 separate and unrelated industries, Isaw to my fascination that if you look at 100 industries, almost 95 of them drive theirenterprise, bring in their customers and run their operations from totally differentmarketing contexts from one another. In other words, industry A operates from amarketing aspect totally different from industry B.

TR: Give me an example.



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JA: Let's take a manufacturing concern. Most of them basically sell with eithermanufacturer's reps, ads in trade publications or trade shows. That's all they do -- theydon't telemarket, they don't do direct mail, they don't do joint ventures with other peoplewho already have their customers, they don't get endorsements in publications. Theydon't explore any of the infinite other possibilities. And one of these ways is where 80 or

90 or 100 percent of their business emanates. But there are so many things you could doin addition to this. For example, you could be running ads in consumer publications ortrade publications: generating leads and converting them through direct mail or throughtelemarketing or through some other kind of mechanism like a trade show: or using aseparate sub-contract representation. I can name probably twenty-five if I was asked to.My seminars are highly interactive, and the participants listen to the proven techniquesfrom other industries.

TR: I see, so they really have one primary focus. Like in the real estate industrywhere they've got a realtor out there who is going to...

JA: Most realtors basically knock on doors cold, or they run ads that nobody reads andthat don't offer any benefit that's in store for the reader who might want to buy or sell ahome -- or they stand for 12 hours quietly, silently and vacantly at an open house that noone comes to see. To me it's just a dissipation of effort and energy -- and the mostprecious commodity we have is time.

TR: So what would you do with that realtor to have that realtor be more effective?Would you use some of these other avenues of marketing?

JA: I would have them look at how much more can they do with the customers they'vegot. Can you re-sell them , sell them more times or can you sell more things? If you

have nothing else to sell them, can you sell them products or services that complement,and are synergistic to what you sell.

TR: In other words, this realtor will add value in a way no other realtor wouldhave.

JA: If they don't understand how to articulate it, I'm going to teach them how. They cango back to all the old customers they ever called on, and I would have them contact themall and re-iterate to them, so they can better appreciate what they did for them in theprocess of selling their house, of representing them, of negotiating the purchase -- so theyhave a greater appreciation.

TR: It's a heavy referral-based industry. How would you tell a realtor, or anybodyto improve their referral generation?

JA: When you ask people how they get referrals, most people say I ask people to giveme the names of people I could call on. That's not what I say, Tony. What I teach peopleto do is go back and re-establish, or establish for the first time, the distinction of theinordinate value you brought to that person, or you will bring to that person, because of



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the effort, expertise, knowledge and the representation you're going to render that no oneelse could. You get them to concede what that is worth to them in both intangible andtangible terms in pleasure, protection in exhilaration at getting a bigger house and havingno problems, and selling and not having to worry about it falling out of escrow. Thenyou get them to denominate it in dollars -- that, isn't it true, that because of the work we

did and the strategy we had, I probably got you the house at the best price possible. Isn'tit true that you probably saved $20,000, $30,000 or $50,000 -- or isn't it true that youthought originally we might have to get $200,000, but instead by using the strategy weworked out together, and me holding true and you respecting me for it, we got you anextra $35,000. So, you denominate what it really meant for them in these terms.

TR: So, they see it as being a real value of something that is tangible.

JA: I call it a sandwich -- half filling, half real perceived, tangible value.

TR: It gives you the leverage for the person who really wants to help you, because

they're not just helping you, they're also helping their friends.

JA: It's not even help, it's a moral issue. You have two choices -- you can allow thatfriend to make the wrong decision and pay $30,000 more. You can allow that friend tosell his or her house to somebody, and because that somebody doesn't give them greatrepresentation, they may let him sell it out for $20,000 or $30,000 less. You can allowthat friend to trust somebody who is in such a hurry to do the deal that it gets all screwedup in escrow and falls out. Or you can take it upon yourself because that friend isimportant to you and you trust and revere the friendship, and you want their life to beenriched, to put them in touch with me, couldn't you? Well, that might be a littleevangelical but that's the way I believe.

TR: If you were talking to somebody who didn't define themselves as a realtor butdefined themselves as an entrepreneur, the reality is that you'd probably go back tothat person and say what are the resources that person needs, not just the additionalcustomers they could bring to you through the referral process but you'd probablybe looking at ways to leverage your relationship, to meet other needs that they havethrough other products or services, would you not?

JA: I would. You asked a question about optimization, can I introduce that and comeback?

TR: Yes, please

JA: I believe I've been very lucky. I've had the privilege to work with the people whoconducted the seminars for W. Edwards Deming. I think he was a seminal thinker. Ibelieve his thinking was more powerfully applicable for entrepreneurs and professionalsthan it even was for manufacturing. He extolled a philosophy of optimization, which inmy opinion means you should never do anything unless you can get maximum benefitand yield, currently and forever, from the minimal effort. In order to do that, you've got



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to understand a couple of, I'd guess you would say, distinctions. First of all, everything abusiness does is a process, and as a process, it can be measured, compared, quantified andimproved.

TR: Give us an example.

JA: Okay. You own a business. You called on customers in the past to probably startthe business. When it was a small business, you probably didn't have a sales force -- youprobably were "it." You became so adroit, so adept and so capable at calling on peopleand unconsciously or subconsciously presenting the greatest advantage to them that youprobably had a very high success rate of closure -- meaning if you called on 10 people,you probably sold 5 -- and the average person probably bought $1,000 or $2,000. Butmost people probably aren't as passionate, as clear, as demanding or as capable as youwere. Your average sales person might need to call on 25 people to sell one and his orher average sale might be $200 instead of the $1,000 you averaged. You've got tomeasure and analyze what processes impact your business and what the dynamics of

those processes are. There are two sets of dynamics: one that brings action to bear, andthen one that impacts the dollars to keep them flowing in. In other words, certain factorsbring in more or less people or convert more or less people. Other factors impact thedollars those people spent and the frequency or the continuation of that expenditure. Iteach people to measure that.

TR: Okay so that's one. That's the first principle of Deming.

JA: So, you measure it. Where you are right now is what's called your baseline. Youknow it's basically an average -- the key is an average. If on average when you make apresentation, you convert "X," then "X" is your baseline. Whatever your unit of sale is --

that's your baseline. Now you've got all these baselines. Your goal is to first of allidentify what your baseline is and then identify what the variance is. The variance is thediffering performance levels that occur when other people or other mechanisms are used,and some are better and some are worse. Your goal as a business owner is very simple.It is to raise the baseline and reduce the variance. So, how do you do that?

It's simple. I show people how to conservatively test different ways of performing eachprocess to try and get improvement. And when you get improvement, you do one of twothings -- you either replace what was working, what was your baseline or what was yourcontrol process in a category with that which produces greater results. You don'tnecessarily have to drop what was working before as long as it was profitable because it

may be impacting a different segment of a trial market. Instead, you want to build abroad base with different pillars. Is that getting too complicated?

TR: No, I think you're on track there. In other words, one of the things you'vetalked about in the past is that if you're going to be effective, not only have you gotto measure what you have, but you've got to know exactly what you can count onand find a way to leverage it to get a greater result.



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JA: That's what gives you predictability in your business. People say, " I don't knowwhat I'm going to do in the future." You know exactly what you're going to do in thefuture, plus or minus a small variance once you measure, quantify and then project out.

TR: One of the things you've said in the past is that the major reason businesses fail

is that most businesses have one primary way to bring customers in. If somethingdisrupts that -- something external, something in the government, something in theeconomy, something in the way of a new kind of competitor -- suddenly thatbusiness is in trouble -- or it literally goes out of business.

JA: That's true.

TR: Please describe for us that dynamic and what the solution is. How do we makesure that we have long-term, predictable profit in any business enterprise we're apart of?

JA: I want to use two graphic analogies. I believe you build your success foundation onpillars. I'm going to call it the diving board versus the Parthenon analogy. Mostbusinesses I look at (and I shudder to say most of the businesses or the business ownersor the professionals listening to this tape) would be built as a diving board. Imagine adiving board with only one post supporting the board -- the board is your foundation, thepost is the method or the mechanism you've either consciously or unconsciouslydepended on to generate all your sales and sustained growth. What is a diving board bynature, what does it do? It goes down. If the one post that you've built your business oneither gets saturated or stops being effective, you're in trouble.

So, basically my goal for a client or someone attending my seminar is to systematically

build their business on multiple pillars that support it. One pillar can be whatever they donow: the next pillar will be another alternative form of selling or of generating businessor of lead generating. It can be that one facet of your business is direct selling, anotherfacet telephone marketing, another facet joint ventures or strategic alliances, and stillanother can be contingency or shared revenue, tri-tip selling with advertising mediums,like radio stations -- and the list goes on and on.

TR: So, in other words, if one of those pillars goes out now...

JA: It's a nagging inconvenience that may eliminate 10 percent of your business, but itwill not debilitate or terminate your ability to exist. I approach every pillar as what I'll

call an innovative profit center. You should never do anything that doesn't produce aprofitable outcome for you or that doesn't basically dovetail together and reinforceeverything else you do.

TR: A lot of people reading this right now are thinking "this is fascinating." Butyou know the truth of the matter is that you can pick all this stuff apart and what'smost fascinating is the intensity and passion in which you hit all of them. In other



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words, you're figuring every single tool and how to maximize. It's back tooptimization -- could you describe it again?

JA: Optimization in my mind is the process of getting the maximum yield for themaximum duration of time with the minimal investment from everything you do today, in

the future -- and this is really interesting -- and from everything you've ever done in thepast. From everybody and everything you ever come in contact with. Not just yourbusiness -- your current and past employees, your vendors, your current customers,people you don't sell, suppliers, distributive lines, the location you're at -- everything. So,start with that premise.

Here's a quick summary of my theory. Until and unless you can form a clear, distinct andaccurate picture of your vision for the business, you can't possibly build or fulfill orachieve your dream for that business. And the trick or the secret to building your visionis to master this art of optimization. As I said, optimization is learning how to maximize,not minimize, every asset. Most people I have observed minimize their activities instead

of optimizing them. I show them how to change that.

TR: And right now, the environment demands this -- this is why we're seeingcompanies that are downsizing saying, "Let's look at every part of our business andfigure out how to do it more efficiently than we've ever done it before."

JA: Exactly. Most people don't even identify or recognize all the areas, opportunities,options or pillars for optimization that are available to them because all they have as apoint of reference is what they do in their business. You can't optimize until you firstrecognize the assets, the opportunities and the options available. If you don't knowwhat's possible, you can't be expected to do it. So, you have to first of all stop and ask

what is possible? How many better, other and additional ways could I be doingsomething that would work as pillars in my business?

TR: Part of why people bring you in and go to your seminars is because you tend tosee multiple ways of doing something based upon your background of working withso many different types of businesses in so many types of industries.

JA: You're getting ahead of me, but that's exactly true. You must learn what strategiesallow your business to take the best and maximum advantage of the greatest opportunitiesavailable. Again, this is part of this understanding, this acknowledging and awareness ofhow many other possible ways other people and businesses outside your industry operate.

I call this forming an "optimal success strategy."

TR: Let me clarify something on this, though. There are many things in yourbusiness which don't provide the maximum return and yet generate all these small,little returns.

JA: It's an integrated comment, but you're right. Certain parts of an enterprise may givetheir life for others. They can't be judged out of context. It's an integrated statement. In



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other words, I've had businesses where we purposely acquired new customers at a lossbecause we had analyzed the residual or the lifetime value. We knew that every time welost money, like the Icy Hot example, we really made money. Every time we gave a freeservice, we didn't really lose money, we accrued an incredible benefit. You have to lookat an integrated, holistic context.

So, I show you how to form an optimal strategy. You can't do that until you develop awhole different philosophy to operate your business and life by that forces you to betotally externally focused. I'm going to use the word service or benefit to others becausethe most self-serving thing you can do is to learn to be selfless. People don't realize,you're not playing the game for the moment -- you are playing it for forever. When youlook at it in that context, I've seen these very shallow thinkers who think they're reallyastute because they made a little more profit up front, but they've totally eliminated theresidual effect. And the residual value is where all the real wealth comes from.

TR: And I think the ultimate residual value is the identity that you create in the

marketplace because what people know about you and believe what you can do forthem is what's ultimately going to give you leverage. You can't replace identity.

JA: Exactly.

TR: Now we're getting into what marketing is. Let me ask you two questions.Question one: Finish optimization, but then tell me what is marketing? Second,how do we use optimization and marketing if we don't own a business right now tohave greater leverage in terms of our sense of certainty about our future?

JA: Okay. You can't adopt a superior mindset until you redefine the purpose and

objective of your business from a customer or client benefit perspective. In other words,most people in business are mediocre in success and fulfillment because their purpose isincorrect. You basically have to set yourself up to understand what is the best, thehighest, most distinctive and valuable result, benefit or purpose my company or my valuecan bring to the customer. My job is to help you understand and redirect and re-focus allyour company's activities towards that outcome, otherwise you aren't going to beexponential.

TR: Most businesses tend to focus on how to make a profit versus how to serve thecustomer in the greatest possible way.

JA: It's because they erroneously think those are separate. They're not. They areabsolutely the same function. Anyhow, you can't redefine your business' highest and bestpurpose until you decide to innovate, in my mind, because in its purest sense, innovationis the bringing or adding of superior value to the end user. If you innovate in yourfactory, it's useless if it doesn't bring an advantage to the end user.

TR: You may bring a price advantage to the end user potentially.



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JA: That's fine. A lot of times people do things, but they don't pass the advantage on tothe customer so they think they are making more profit. But sooner or later if you don'tpass an innovation-based benefit on a continuous basis to your customer, you won't keeptheir patronage.

TR: That makes sense.

JA: You can't add value to someone, or someone can't see you adding value, until andunless they understand and appreciate what you're doing, have done, or will dodifferently for them, and that requires better marketing. Because, Tony, in its purestsense, marketing is a few things. It's the continual education of a customer or prospectfor the life of that customer on the advantages and benefits your company or your servicebrings them that no one else does; it's the intelligently formulated process of increasingtheir demand or desire for your product or service; and finally, it's the strategic processof bringing them to closure and to completed action.

TR: I like your definition that marketing is a life-long process with the customerbecause that presupposes we are going to have an ongoing relationship. But it'seducating them as to what they get by working with us versus anybody else -- andthen the process of using that education to increase their desire for our product.

JA: Not only their desire but their appreciation. It's giving them a basis to discriminateon your behalf.

TR: Interesting. Let's come back again to the individual now. How does anindividual who doesn't own a business optimize or really build a Parthenon, if youwill, for their financial life, their business life and for their career?

JA: It's very simple -- the moment you believe it's simple. All you have to do is putyourself in the position of your employer. Your employer is as scared as you are. Youremployer is a man or woman or a group of investors who have sunk enormous amountsof capital into their businesses and are very eager to see that investment continue to payout. As soon as you help give them their outcome, they will love you, treasure you andnever want you to leave. How do you do that? By identifying greater and more effectiveways they can make their enterprise throw off greater profit. They can get morecustomers from the action. Just doing the same thing I suggest that any business ownerdo, but do it as a "de facto" business owner. Identify where they are and how you canincrease the unit of sale and the frequency of sale and other things you can do with

customers or with prospects who are inactive. When you have identified what those are,go to your employer. You'll find that the moment you implement them, they bring suchan advantage to your business you may not want to necessarily reveal them to youremployer until you effect the right structure.

TR: I assume that means economic structure for your added value.



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JA: That's right. I'm giving you both sides of the transaction in this interview. You goto your employer and you make them a very simple proposition. You ask them if, onyour own time, you are able to identify, organize and implement, in the mostconservative manner, processes, mechanisms, and activities that will increase the amountof profitable sales -- what kind of deal you could work out. Make sure they realize that

they will augment -- never supplant -- the business' normal activities. They will onlybring increased value.

TR: You are adding more pillars, not taking away what they're already doing,which they are committed to and believe is the essence of their business.

JA: Right. If I can do that for my company, and if the activities make a lot of money,can I get back a dime or a quarter for every dollar I make you? And if that's too rich, canI get back a nickel or a dime? And if that's too rich, can I get back an extra $5,000 everytime I make the company "X" dollars for, and this is the key, as long as it keeps working?Would you mind putting it in a simple letter for me, sir or ma'am, as the case may be.

The basic premise is presuming that you are going to bring things in. Think of it as adual value because you can export things, too. Case in point. Certain companies havetheir manufacturing structure down where they get greater efficiency per hour or permanpower or per hundred square feet. They get less waste. They have greater ways todo things. They have greater tax advantages. You can take those techniques that arebeing used internally and you can license or sell or rent those to other people.

TR: Give us an example.

JA: I'll give you 2 examples. I had a client who owned a car wash. He came to me to try

to improve his sales. In looking at his operations, I realized that his process of gettingpeople to take the hot wax and all the other options was about three times better thanalmost any other car wash in the country. I said why don't you sell that technique toother people. He reluctantly tried and ended up getting something like 1,000 car washfacilities to pay him $100 a month to use his way of articulating the option of the wax sothat three times as many people took the wax option. That was all profit. I had a realtorone time who was a very hot realtor and was great at getting listings. As she was sittingon her thumbs, trying to figure out something to do after she sold her business, I got herto take the technique she used to get listings and teach other people. The first event sheconducted made $60,000 in three days teaching people at $1,000 per head.

That's just one way, but there's tons of ways. You can do it for other people. You canbuy and sell concepts. You can be a brokerage firm. So the idea is how many more wayscan you make your company more efficient? The idea of downsizing is very limited.Most entrepreneurs don't have the slightest understanding of all the ways to reduce theircosts to improve their productivity. And I'm just talking in the first segment of thisinterview about ways to increase sales -- well, the flip side is all kinds of things. If youjust improve such things as reducing attrition, which is the loss of customers, orconservation, which is the retention of customers, that alone could increase your sales.



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All you do is look at other ways you can bring your employer improvements,efficiencies, and reductions that they wouldn't have done on their own. And you can askfor percentages of savings and of increased productivity that you can quantify. And witha few simple phrases uttered on paper and signed, they could even downsize andterminate your employment and you could still get a residual check for life. And what

I've done with a lot of people when they have done this, was teach them to go to theemployer and get a buyout -- so you could get a lump sum payment.

TR: I remember you were talking to someone about the customers they weren'tgetting. They'd run some advertisement, and people had not bought their productor service, and you turned around and said that's a great opportunity -- while theymay not necessarily buy from you, they're going to buy from somebody. Why notsell the leads to your competitors? You're even figuring out how to maximize oroptimize the people that don't buy from you. Let's talk about that and relate thattoo, if you would.

JA: I believe one of the greatest areas of opportunity is in the people you don't sell. I dida seminar one time and made a small fortune on this. I was selling a training program toput people into a certain kind of business. I went through Entrepreneur Magazine andsaw two or three people who had a similar training program. I went to them and askedthem if they would let me furnish them with a letter they would send to their existingpeople who paid to go to their training. They both refused. I said, "Fine, do you haveprospects who inquired and didn't convert?" They said, "Sure, we've got tons of them." Iasked if they would sign a letter to them saying in essence that we were gratified whenyou inquired, saddened you didn't take advantage of our training, but realized there musthave been one of a few reasons. Either the timing wasn't right, it was too expensive, orthe opportunity didn't work for your skill set. If you're still wanting to go into business

for yourself, there's only one other person we think might help you, and theyrecommended me. I made $200,000 by getting them, because I said those people didn'trespond either because they weren't interested in going into business, they didn't have theright compelling offer, they weren't made the right proposition, the concept was wrong,the approach was wrong, the people were wrong. But they raised their hand for a reason.

TR: You were in the lead-generating business at one time, weren't you?

JA: Yes. It's very fascinating. Most people don't understand that everyone generatesleads. The Yellow Pages are leads. Somebody you meet can be a lead. Leads haveseveral critical factors. What they cost is only one. The conversion rate is the second

factor. The unit of sale is the third, and the residual value the fourth. Until you know allof those factors, you don't know anything. People say, "Yeah, our leads cost us $25 or anew customer costs us $50." That doesn't matter. What matters is, what do they bring inthe first sale? How often do they come back? What's the profit on them? You have toanalyze all these factors. A lot of people who generate leads don't analyze them, but thefew that do standardize them all together. They may say a lead costs us $25. But youmay have a lead that comes from one source that costs you $100, that's ten times morevaluable than the ones that cost you $5.



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TR: Every time you work with another group you must add new references anddistinctions.

JA: Yes, because I change. Basically, I do something no one else does. I don't conduct

my live programs by standing at the podium and lecturing. I make the participantsconduct the programs and as such I learn as I'm teaching. Every time I learn a new wayor learn how somebody else uses my techniques, I just file them away. Then Istandardize and categorize them under their distinctions of these three ways to grow abusiness or other categories. It's not complex. It can be taught very easily as attested bythe thousands of people that have been able to successfully use it.

Well, where is your business coming from? Most people have never analyzed the originof the business, and it's a two-prong question. Where people are coming from and whererepeat business is coming from? It is trite, but the 80/20 rule is probably true. Probably20 percent of your customers are bringing you 80% of your business, but you're not

treating them special in two ways: acknowledging them or offering them more. If youknow that one kind of a customer has a tendency to buy more often and in higher volume,you can program them to even more purchases. You can offer them products andservices not normally offered because they are too expensive to stock or produce. Youmight find just like with realtors -- they knock on doors, they run ads and they doreferrals -- but when I ask them to analyze regressively where the origin of their businessis, they'll find that 80 percent of their new business came from one or two categories, yetthey're not discriminating. They are spending the same or less time on those categoriesthan they do on the rest. The idea is getting the highest and best use of your time andopportunity. Where do you get the best leverage on yourself and your business? I thinkthe key is to ask lots of questions, as specifically as you can, and to keep going deeper.

TR: If you gave me three questions that every business person needs to askconsistently, you start out with the first one, which is: where is the origin of mybusiness? Where am I really coming from? What are the other two?

JA: First, where is it coming from, where could it come from? It's a similar question.Most people have no idea where their highest and best source of new business is. I meanthat in a geographic, identifiable approach. Number two, who stands to benefit more thanyou by your being more successful? Most people don't ask that. That opens up lots ofpossibilities. First, the customer benefits if you understand results. Second, the suppliersbenefit because you may be speaking about a greater beneficiary to a supplier. You may

be 80 percent of their business. They may be more motivated to fund, to help and tosupport you in growing your business.

TR: That's a great perspective.

JA: Number three, who's in the position who already has my customers and has alreadysunk an enormous amount of effort, time, money and action to get their goodwill and



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would be in the perfect position to recommend, endorse or make them available to mewith a positive pre-disposition?

Also, what other ways can I benefit form the goodwill I have with my customers in anethical and beneficial manner to them? And what ways can I better reduce the risk of the

transaction thereby getting more people lowered in their resistance barrier to takeadvantage of my product or service the first time?

TR: That leads me to a very important concept. Let's talk about risk reversal.How important is that? What is it -- and how can virtually any business use it to seean improvement in their ability to bring customers to the table initially and thenapply it in the future?

JA: First of all, how important is it? Do you want to stay in business, be competitivelysuperior and be obscenely wealthy and successful? In any business or any life encounter,one side of the transaction is always being asked to assume all or more of the risk then

the other. It may be done explicitly, implicitly -- it may not even be consciously done butin every transaction it occurs. To the extent you can acknowledge this fact and eliminate,reduce -- or even make better than risk-free the transaction on the part of the prospectivecustomer -- you own the business. Let me give you an example because it's from the19th century and it's a wonderful little story. A man wanted to buy a horse for hisdaughter. There were two horses for sale. One man said to him, "Buy the horse, take ithome, and if you don't like it, bring it back and I'll give you back the money." The otherman, who understood risk reversal said, "My horse is kind, gentle and good. Why don'twe do this? Let me bring the horse to you, let your daughter ride the gorse for 30 days. Iwill even bring you the oats for the horse. At the end of that time, you decide whetherthe horse is suitable for your daughter. If it is, I will come then and ask to be paid, If it is

not, I will come then and take it away." Now which horse would you buy?

TR: No question.

JA: Here's the irony. Every business really guarantees the transaction by and largebecause if there's a problem, they either make good on it, give the money back or offer areplacement, but they sweep it under the carpet. I teach people to bring it to the top.Make it a powerful condition -- a very specific aspect of the selling transaction and not inthe way of saying "satisfaction guaranteed." That's like saying service, quality anddependability will sell your product or service. I believe you denominate veryspecifically. You give somebody a matrix or a discriminator to impose on what their

benefit, and result should be. You tell them, look Mr. Robbins, if this service doesn'tmake you 20 percent more effective or reduce your expense 15 percent, if you aren't thisor aren't that at the end of 30 days, then you have every right to ask for your money back.

I believe in giving a better than risk-free proposition in most of my transactions becausepeople come out protected, advantaged, and ahead of the game.



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TR: And what is your belief that guides that process? What's your belief aboutpeople and what they really need in that situation?

JA: I believe two things. There's three kinds of people in business. The people whoactually render an incredible service and know it, but don't tell it. There are people who

actually render a great service, don't know it and don't tell it. There are people who don'trender a very good service or product. The latter, you can't do much with. They're notgoing to endure because the market will figure them out no matter what. A risk reversalor guarantee is only going to help them the first time.

But the vast majority of people either do or can render such a superior service and gettheir market to see them more distinctively or advantageously. But the only way to dothat and make it easy is to acknowledge the fact that hey, even though I know what I dofor you is going to produce a great outcome. So I see it as my job, as my charge, as myresponsibility, Mr. Robbins, to allow you to avail yourself of it, to preview it, toexperience it, totally at my risk. Why? Because if it works the way I say, you're not

going to not want to continue so I'll be benefited. If it doesn't, I don't deserve to keepyour money anyhow, and that's the basis I operate on.

Ask yourself this question. You have a choice of buying a product or service from fivevendors. Four of them basically don't even mention a guarantee or are very nebulous.One of them not only mentions it but insists that it be a condition of doing business,insists you put them through the paces, insists that be the only way they sell to you andhelps you determine what your expectation minimally should be for you to be satisfiedand get value. Which one are you going to buy from? Now people say, "It's terrifyingI'm going to lose all my business if I do that." But you should ask yourself this question,"Does your product perform at the level you would promise?"

TR: All that would come across to me as hyperbole until you say, "And if thesethings don't occur..."

JA: Within 30 days, as long as you do your part of whatever the regimen is, you have todenominate specifically. But most people don't tie it all together. I have a client who is afounder of Federal Express. He used risk reversal and increased his businessdramatically. His business quadrupled the first time he used it. I have another client whois the founder of the largest accounting firm in the country. He tried it to get clients andit doubled his closure rate. The incidence of refund or unraveling was nil, but itpresupposes you don't do it if you don't perform a great service. I tell my students to

never denominate an expectation if you can't deliver it.

TR: The other thing that happens is when you make demands upon yourself, thecustomers actually tend to soften on you more because they see that you are trulycommitted. They see the integrity in how you're operating within your business.

This brings up another issue, which is the importance of creating a unique identityin the marketplace so that when someone thinks of that particular product or



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you should think not only in terms of selling your product but selling all kinds of otherproducts or services. Think in terms of being an ethical opportunist. By that I mean yourgoal is to find many ways to optimize the selling opportunities you have to that customer.Does that make sense?

TR: Interesting. So to answer the question directly then -- the way you make a 90percent success ratio is to fully analyze and understand how to move the customer.

JA: Non-emotionally.

TR: That's pretty forceful.

JA: Because I'm thinking most people make all their decisions from their heart. Theyhave this vision of basically being a business. It's a vision of being happy, a decision ofmaking money. But what they end up doing is making a crumbling edifice that they can'teven sell and they have to run it and it consumes them. It's horrible.

TR: They actually end up working harder than they ever did in their job and forless money very often.

JA: And their life savings is compromised. I have a philosophy on all business which Iwant to make sure I can share with you because it's really very important. Whether JayAbraham comes into your life or not -- you are the one who has consciously made thedecision to invest your whole life, the fate of your family and the fate of all kinds of otherfamilies who are dependent directly or indirectly on you. You're the one who has yourhouse mortgaged. You are the one who has to get up every Monday morning and be inthere to open the door. You are the one who has to make payroll clear the bank. You are

the one who has your name on the line for real estate. You owe it to yourself to do acouple of things. One, get the greatest yield out of everything you do. Two, get thegreatest joy out of every hour you spend. Three, give the greatest value you can not onlyrender but that can be perceived so you have the greatest vehicle you're building so it cangive you the greatest benefit that you and it deserve. That's all.

TR: Well, Jay, I appreciate the time we spent together. I think you've given peoplea tremendous number of distinctions or answers and hopefully what you've done issparked even more questions. Because as you said, that's when we really learn,grow and expand. I appreciate it. If people have questions about how to reach youand avail themselves of your services, can you give me a phone number or a way for

them to contact you?

JA: Sure. They can call my offices. It's in Los Angeles, Rolling Hills Estates, actually.The number is (310) 265-1840. Thank you very much, Tony.

TR: Thank you. I had a wonderful time with you and I'm looking forward tohearing many stories from people who utilized what they've learned to make



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quantum leaps, exponential leaps, in the quality of what they do for people andthemselves simultaneously.

Jay Abraham Getting Your Business Going

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